Why gifts from the Far East don’t arrive on time – economy

Where’s my Christmas present? John Healey is a grown man, and yet he asks this question with childlike fear. He is an author at Los Angeles Times, he is a board game aficionado and, like so many people now, he simply wanted to know: Where is the product that I have ordered and want to put under the Christmas tree? He started a fascinating experiment that clearly shows how fragile the global supply chain is at the moment, and that symbolizes the entire industry. But it also shows, along with a few other numbers, that it benefits companies that were believed to suffer.

Healey has the board game Wingspan Chosen, it could have been tech toys or a teddy bear. All of this is produced in Shenzhen, China, and the problems start there: The production of this game takes four weeks longer than the usual three months, partly because of Covid-related restrictions and partly because of government regulations. That alone would be bearable; the real problem, however, is that there are hardly any containers at the port of Shenzhen to load the game into.

This, in turn, is due to the fact that these containers are located on one of the 100 ships that are currently lying in front of the ports in Los Angeles in the Pacific – or waiting there to be transported away by a logistics company’s truck. US President Joe Biden can order that work be carried out around the clock, but he cannot conjure up trucks. Delay at the Chinese port: several weeks. The ones at the port in LA, including removal: up to six weeks.

Biden can’t conjure up trucks, and neither can truckers. According to the TV broadcaster CNN, around 80,000 truck drivers are missing in the USA alone to relieve this supply chain; this leads to delays of a few weeks again. If you add it all up, the game that Healey would have liked to put under the tree should not arrive until May next year. Merry Christmas.

One would think that those companies that are responsible for transport are now complaining; But now it’s getting interesting: AP Møller-Mærsk, the largest container shipping company in the world, should make a profit of 16 billion dollars this year; three times as much as in 2014, the Group’s best financial year to date. Cosco Shipping posted profits of $ 12.6 billion in the first nine months of the year and recently announced that it would be able to double sales compared to last year. Wan Hai Lines has made its profit nineteen-fold, to $ 2.5 billion. Works for them – but why?

Supply and demand have shifted dramatically during the pandemic. In 2019, it cost around $ 2,000 to move a container from China to the American west coast. When the global supply chain became fragile that summer, these prices rose as high as $ 20,000 per container; there are now around 15,000.Experts believe that prices will fall again by mid-2022 – but currently they are still seven and a half times the pre-Covid time.

Customers pay in advance, and they pay a fine to the shipping company if they don’t pick up the containers from the port in a timely manner – and above all: bring them back empty. That means: Due to the immense price increase, shipping companies are not under so much pressure to deliver as quickly as possible. This also applies to some US companies on land: CH Robinson Worldwide, one of the largest logistics companies in the world, made a profit of 614 million dollars in the first nine months of this year; 30 percent more than in the same period in 2019. “The customers of the logistics companies are desperate because prices are rising and the products are not arriving,” says Christopher Tang, professor at the UCLA School of Management and an expert on supply chains: “Large logistics companies should secretly be quite happy. “

Where’s my Christmas present? On a ship in the Pacific or in a truck between Los Angeles and Chicago, maybe. If you want to explain this to your children, you might say: on the way from the North Pole to the chimney – but it may be that the manufacturer of St.

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